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Edited version of private advice
Authorisation Number: 1051960309929
Date of advice: 11 March 2022
Ruling
Subject: Compensation payment
Question
Is the compensation payment you will receive from the foreign government taxable in Australia?
Answer
No.
Based on the information provided by you to the Commissioner, the payment you may receive from the foreign government is not taxable.
The payment is not ordinary income, and any taxable capital gain is disregarded under section 118-37 of the Income Tax Assessment Act 1997 as the payment will represent compensation for a wrong or injury you suffered.
You will not need to pay tax on any payment you receive from the foreign government in Australia.
This ruling applies for the following periods:
Year ending 30 June 2022
Year ending 30 June 2023
The scheme commences on:
1 July 2021
Relevant facts and circumstances
Property you owned in a foreign country was seized by a foreign government.
The foreign government has made an offer to pay you compensation in respect of the property.
Relevant legislative provisions
Income Tax Assessment Act 1997 section 118-37